1047RA CIO Insight: Growing Importance of Cloud in IT Planning – Europe Also on the March
What is Happening? Earlier this quarter, Saugatuck began publishing the results of a deep-dive interview program conducted with large-enterprise CIOs and CTOs, with a focus on gathering first-person insights into the impact that Cloud is having on IT strategy and planning. Last week, Saugatuck traveled to Europe and was able to extend this research through a series of one-on-one meetings and briefings with large-enterprise IT leaders, as well as keynoting the well-attended annual EuroCloud France conference in Paris.
This Research Alert provides some top-line insights as previously published in two premium research pieces, as well as extend the analysis with new input from this European trip. Overall, our research clearly demonstrates an accelerating pace and scope of Cloud adoption – with Cloud now fully accepted and fundamental in the plans of most of the senior IT leaders we have spoken to (globally).
Why is it Happening? During our trip to Europe last week (Germany and France specifically), we asked several of the same deep-dive interview questions as we previously did in our US-focused research program – receiving rich input from eight European-focused large-enterprise IT leaders, on top of the original input we received from a dozen US CIOs and CTOs. Here we highlight one of the questions we asked of both groups:
How important is the Cloud in your IT investment plans for 2012? Why? If we asked this question two years ago (2010), how would you have ranked the answer?
As Figure 1 illustrates, the responses from the European IT leaders paralleled their US colleagues, with the average response to the question of how important is the Cloud to their IT investment plans growing rapidly to a rank of 3.2 in 2012, from a 2.0 in 2010 (on a scale of 1-Not Important to 5-Extremely Important).
In contrast, as previously shared through a post in our blog Lens 360 (CIO Insight: Importance of Cloud in IT Strategies/Plans Growing, 01Feb2012), the responses from the US-based CIOs grew to an average rating of 3.7 in 2012 from a 2.2 in 2010 (or just above a “Somewhat Important” ranking) – with the 2012 ranking muted by one of the responses who wasn’t yet doing anything in the Cloud.
What is clear is that most large enterprise IT leaders across both sides of the pond are now well beyond the learning phase, which is probably the best way to describe where they were two years ago. Interestingly, though, only three of the eight European IT Leaders we spoke to ranked Cloud “Very Important” or “Extremely Important”) versus their US colleagues, where two-thirds of the CIOs responded to this question with a ranking of “4” or “5”. This suggests that the US-based CIOs (which predominantly work in globally-focused companies) may be further along their evolution in thinking about the effective use and business benefit of the Cloud in their organizations.
Figure 1: Cloud’s Evolving Strategic Importance for Large-Enterprise CIOs / CTOs – US / Global vs. Europe
Source: Saugatuck Technology Inc., 1Q2012, N=20 large-enterprise CIO / CTO deep-dive interviews
As previously shared, roughly a quarter of the US-based CIOs / CTOs we interviewed are now aggressively moving toward the Cloud, in all of its forms. These IT leaders are now developing and adopting 3-5 year strategies to deploy a fully enabled Cloud application / infrastructure environment, including plans to rip and replace a significant amount of their current data center footprint. In contrast, only one in eight of the European CIO interviews shared such a forward looking agenda in the Cloud.
As a member of the Saugatuck research network recently shared in an email, the more progressive CIOs he is monitoring are increasingly “using Cloud capabilities to begin major multi-year transformations of IT at their firms – introducing technologies based on the Cloud, but not necessarily focused just on compute or data.” This would imply that the primary benefit is less about cost, per se, and more about developing a flexible and adaptive business computing architecture that can help support the business.
This parallels input from our initial US-based CIO interviews, but also points up a key difference in our most recent European-focused interviews. Throughout our visit, the primary (although by no means exclusive) focus of Cloud adoption and use we encountered in Europe is heavily biased around infrastructure deployment (with a focus on footprint consolidation and migration of existing workloads – with an emphasis on cost control), followed by additional investments around tactical SaaS solutions, followed in a distant third by PaaS-focused investments. While our European interview sample size is clearly small, there was very little discussion of investment initiatives that can be viewed as transformative or innovation-driven.
Only one very large enterprise (European headquartered, but a very global business) we spoke with was truly pushing the envelope with a best-in-breed infrastructure-led investment strategy that will be truly be transformative, as it concerns both the delivery of IT service, and in terms of lowering cost.
Market Impact What became clear in several of the interviews last week are some of the more uniquely structural (e.g., organizational, labor law) and cultural challenges that large European firms face in evolving toward a Cloud or Hybrid-Cloud model. With Cloud being a key catalyst that is helping to reshape the size, scope and mission of IT, many of the European IT leaders at larger firms shared their concerns about their ability to flexibly adapt to a rapidly evolving IT architecture, given the current labor practices in place throughout much of continental Europe.
This, combined with a generally conservative (fast follower) cultural bias toward the adoption of new technologies (except for the Nordic countries, and to a lesser extent the UK, for example) – clearly positions European large enterprises in a tougher position to rapidly innovate. What we sensed is that many of these large-enterprise IT leaders fear is that the business will increasingly opt to buy Cloud services directly, and cut central IT out of the equation, even in an environment where dedicated centralized services are available. While this might very well be true in some cases, redefining the IT mission to support rather than oppose the Cloud, is what is ultimately required. . .